From Marc to Market:
Overview: The US dollar is mostly firmer in thin May Day turnover. The Japanese yen is the weakest of the G10 currencies following what is seen as a dovish hold by the Bank of Japan, which cut growth forecasts, shaved inflation projections, and delayed reaching its inflation target on a sustained basis. The market downgraded the chance of another hike this year. The euro was sold a little through $1.1290 before rebounding through $1.1330. Sterling extended its pullback and found support near $1.3275. After falling to CAD1.3270 yesterday, its lowest level since last October, the greenback recovered through CAD1.3820 today. The market has largely shrugged off yesterday's negative Q1 US GDP print, recognizing the significant distortions caused by positioning around US tariffs, which bolstered imports, inventories, and may have prevented a sharper drop in consumption.
Equity markets in Asia Pacific that were open, including Japan, Australia, and New Zealand rose. In Europe, the gains in the UK are lifting the Stoxx 600 Index for the eighth consecutive session. Strong US earnings (e.g., MSFT and META) are helping lift US index futures today. The 10-year JGB yield fell nearly six basis points to slightly below 1.25%, its lowest level since April 9. The US 10-year Treasury yield is 1-2 bp lower, below 4.15%. Not only did US equities recover from the sharp losses since earlier in April but so did Treasuries. Recall that 10-year yield rose to almost 4.60% amid worries of a capital strike earlier in April. Gold is extending its pullback. It reached $3500 on April 22 and is hovering around $3220 now. It has fallen through the 20-day moving average (~$3233) for the first time since April 9. June WTI is continuing its sharp retreat. It is off another 2.3% after falling nearly 8% over the previous three sessions. It is below $57 after finishing last week, slightly above $63....
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